The California housing market posted its largest annual sales decline since March 2014 in September, as home sales fell below the 400,000-level benchmark for the second consecutive month. This indicates that the market is slowing as potential buyers appear to be putting their homeownership plans on hold, according to the California Association of Realtors.

Closed escrow sales of single-family homes in California totaled 382,550 units in September, down 4.3 percent from the revised 399,600 level in August and down 12.4 percent from 436,920 home sales in September 2017. Meanwhile, the statewide median home price dropped to $578,850, down 2.9 percent from $596,410 in August, but up 4.2 percent from a revised $555,400 in September 2017.

Realtor officials point to high home prices, rising interest rates, and the new tax reform law as reasons keeping buyers on the sidelines. “The housing market continued to deteriorate and the decline in sales worsened as interest rates remained on an upward trend,” explained C.A.R. president Steve White. “Tax reform, which increases the cost of homeownership, also is contributing to the decline, especially in high-cost areas such as the San Francisco Bay Area and Orange County.”

Price appreciations have slowed in the last few months and inventory has risen considerably since June when the statewide median price hit a new peak, according to Leslie Appleton-Young, C.A.R. senior vice president and chief economist. Appleton-Young noted, “Buyers are becoming increasingly concerned about market developments and are reluctant to purchase at the prevailing market price. As such, the deceleration in price growth will likely continue in coming months.”

Sales in the San Francisco Bay Area declined 16.4 percent from September 2017, the largest decline since October 2010. Santa Clara County posted the largest drop at 22.6 percent. Home sales there were down 22.2 percent from August.

While home prices continue to grow in the Bay Area, C.A.R. reports the rate of appreciation has slowed since the first half of the year. In September, the median price in the Bay Area increased 9.8 percent from last year, lower than the average year-over-year growth rate of 14.9 percent. Three counties showed double-digit median price growth from the previous year: San Mateo (14.2 percent), San Francisco (11.7 percent) and Marin (11.6 percent). In Santa Clara County, the median home price of $1,250,000 in September was up 5.9 percent from $1,180,000 in September 2017 and down 3.5 percent from $1,295,000 in August.

Statewide active listings rose for the sixth consecutive month, increasing 20.4 percent from the previous year. September’s listings increase was the biggest in nearly four years. The Bay Area had the largest increase in active listings, with a surge of 44 percent year over year. In Santa Clara County, active listings more than doubled (+113 percent) from September last year.

“We’ve always said real estate is a cycle and while we’re not concerned about a downturn, this shift in the market indicates buyers may have more negotiating power now than a year ago,” said Bill Moody, president of the Silicon Valley Association of Realtors.

At the same time, Moody cautions about timing the market. “The time to buy or sell is the right time for you, what’s best for your situation and for you family,” said Moody.